Cromwell Property Group · ASX:CMW

Cromwell Property — FY2017 Earnings Presentation

45 slides from Cromwell Property's earnings presentation, Aug 25, 2017

  1. Slide 1: FY17 Results Presentation

    For personal use only FY17 RESULTS PRESENTATION 25 August 2017 CMW – FY17 Results 1

  2. Slide 2: Important Information & Disclaimer

    Important Information & Disclaimer This presentation including its appendices appropriate for their particular jurisdiction. (PSF), Cromwell Phoenix Core Listed Property Fund (Presentation) is dated 25 August 2017 and has been ARSN 604 286 071 (PCF), Cromwell Phoenix For personal use only Cromwell P

  3. Slide 3: Section 1: FY17 Overview

    For personal use only SECTION 1 FY17 Overview

  4. Slide 4: Cromwell Property Group Strategy

    Cromwell Property Group Strategy Our goal is to provide securityholders with stable, secure and For personal use only increasing distributions per security over the property cycle. Targeting an 80:20 Operating Profit Split between direct property investment and funds management. Direct Property Inve

  5. Slide 5: FY17 Key Highlights

    Cromwell Property Group FY17 Key Highlights For personal use only  FY17 Operating Earnings 8.65cps - 0.25cps ahead of guidance (8.4cps).  FY17 Distributions of 8.34cps.  Net tangible Assets (NTA) of $0.89.  Anticipated FUM growth in FY18.  Investment in FY17 and FY18 to lead to:  Future value

  6. Slide 6: FY17 Headline Results

    Cromwell Property Group FY17 Headline Results For personal use only FY17 Financial Results Earnings and Distributions History FY17 Segment Results 9.5  Statutory profit of $277.5 9.0  Property segments operating million ($329.6 million in 8.5 profit of $124.7 million ($135.4 FY16) 8.0 million in F

  7. Slide 7: FY17 Statistics

    Cromwell Property Group FY17 Statistics Global platform offering diverse product range across key property sectors For personal use only Diverse Product Range Track Record of Successful Partnerships Extensive and Broad Skill Set Portfolio Platform AUM by Sector 4.0% $ 10.1 bn1 360+ 13.0% 6.0% Office

  8. Slide 8: Strategy – Realising, Recycling and Reinvestment

    Strategy – Realising, Recycling and Reinvestment  Realised $762.3 million in total proceeds from the sale of 12 assets over the last four years. For personal use only  $96.8 million realised fair value capital gain on sale of these properties. Actual Actual Actual Actual 2014 2015 2016 2017 #039;000

  9. Slide 9: Strategy – Realising, Recycling and Reinvestment

    Strategy – Realising, Recycling and Reinvestment For personal use only  Recycling capital to enhance future earnings quality and to minimise risk and future cost.  Reinvestment to improve earnings quality for core stabilised assets.  Reinvestment to fund short to medium term additional investment

  10. Slide 10: Strategy – Property Portfolio Outcomes

    Strategy – Property Portfolio Outcomes  Reinvestment has led to transition of the portfolio to a more defensive focus. For personal use only  Core portfolio now has very long WALE as well as low capex and incentive requirements.  Reinvestment into Core+ portfolio assets has led to a high level of

  11. Slide 11: Strategy – Funds Management Outcomes

    Strategy – Funds Management Outcomes Cromwell European Real Estate Investment Trust (CEREIT) For personal use only  Cromwell applied to Singapore Exchange Securities Trading Limited (the SGX-ST) for approval for an initial public offering (IPO) of CEREIT.  On 23 August 2017 the SGX-ST issued its E

  12. Slide 12: Property Portfolio

    For personal use only SECTION 2 Property Portfolio

  13. Slide 13: Property Portfolio – Valuations Continue To Rise

    Property Portfolio – Valuations Continue To Rise  Property segments operating profit was $124.7 million, comprising 82% of the total FY17 amount. For personal use only  Fair value increase in held portfolio of $108.7 million net of property improvements, lease costs and incentives.  Weighted Aver

  14. Slide 14: Property Portfolio – Tenant Profile Remains Robust

    Property Portfolio – Tenant Profile Remains Robust Geographic Diversification1 Tenant Classification1 For personal use only 2 9.4% ACT 19.7% 21.7% Government Authority NSW 23.0% 45.5% Listed Company/Subsidary QLD Private Company 32.8% 47.9% VIC % of Gross  Tenant profile remains consistent and of h

  15. Slide 15: Property Portfolio – Lease Expiry Profile Improves

    Property Portfolio – Lease Expiry Profile Improves For personal use only 60% Lease Expiry Profile % Gross Income  Favourable Future Lease Expiry Profile 48.9% 50%  Occupancy of 92.1% (89.7% FY16) 40%  WALE of 7.2 years (6.48 years FY16) 30% 20%  Average fixed review over next 3 years 12.9% 9.7%

  16. Slide 16: Property Portfolio – Future Lease Expiries

    Property Portfolio – Future Lease Expiries For personal use only Future Lease Expiries representing >1% income (FY18-FY20) % of Total Portfolio Property Tenant Area (sqm) Expiry Date Rental Income FY18 13 Keltie Street Department of Prime Minister and Cabinet 7,048 30-Jun-18 1.60% FY19 19 National C

  17. Slide 17: Property Portfolio – Leasing Success In Key Assets

    Property Portfolio – Leasing Success In Key Assets For personal use only  64,000 sqm leased in total in year to 30 June 2017.  Notable lease renewals include;  18,524 sqm to Therapeutic Goods Administration at TGA.  15,414 sqm to Bureau of Meteorology at 700 Collins Street.  9,474 sqm to QUT at

  18. Slide 18: Bundall Corporate Centre Realisation

    Property Portfolio – Bundall Corporate Centre Realisation Bundall Corporate Centre sold in June for $89 million For personal use only Property Data Active Management Property Type Office • Achieved improvement in property appeal through better onsite management 1 Corporate Court, Address Bundall QLD

  19. Slide 19: Health & Forestry House Realisation

    Property Portfolio - Health & Forestry House Realisation For personal use only Agreement to sell asset for $65 million in November 2017. Property Data Active Management Results Property Type Office • Acquired with a relatively short weighted  Cromwell has entered into an agreement to sell average l

  20. Slide 20: Property Portfolio – Reinvesting For Growth

    Property Portfolio – Reinvesting For Growth Tuggeranong Office Park, ACT For personal use only  Department of Social Services due to move in September 2017.  15 year lease over 30,700 sqm.  5 star Green Star rating and a 4.5 NABERS energy rating.  Canberra’s biggest LED lighting-only office deve

  21. Slide 21: Funds Management

    For personal use only SECTION 3 Funds Management

  22. Slide 22: Funds Management – AUM Steady

    Funds Management – AUM Steady For personal use only  Operating Profit of $27.7 million (FY16 $29.2 million). Split; Change in AUM ($bn)1  Wholesale Funds $16.9 million (FY16 $19.0 million).  Retail Funds $8.2 million (FY16 $10.0 million).  Internal Funds $2.6 million (FY16 $0.2 million).  Tradi

  23. Slide 23: Wholesale Funds – Strong Transactional Activity

    Wholesale Funds – Strong Transactional Activity  Some dislocation seen in first half in UK post Brexit vote. Continental For personal use only Europe remained strong throughout.  Acquired Artemis portfolio with Goldman Sachs. A pan-European portfolio of 33 assets, 360,000 sqm that are currently be

  24. Slide 24: Retail Funds – Solid Underlying Result

    Retail Funds – Solid Underlying Result  Operating profit of $8.2 million (FY16 $10.0 million). For personal use only  Total AUM of $1.8 billion (FY16 $1.7 million). Variance in operating profit driven by reduction in performance fees compared to prior comparison period.  Cromwell Riverpark Trust

  25. Slide 25: Capital Management

    For personal use only SECTION 4 Capital Management

  26. Slide 26: Capital Management – Managing To Opportunity

    Capital Management – Managing To Opportunity  NTA has increased by $0.08 to $0.89 (FY16 $0.81). FY17 FY16 For personal use only ($M) ($m) Assets  Current Cash and Cash Equivalents of $86.9 million. Cash and Cash Equivalents 86.9 95.6 Investment Property 2,357.8 2,274.0  Investments at Fair Value

  27. Slide 27: Capital Management – Diversified Debt Profile

    Capital Management – Diversified Debt Profile1  Facilities diversified across 8 lenders + CB issue with varying maturity dates. For personal use only  Weighted average debt expiry of 2.4 years (FY16 3.2 years) on a look-through basis with 68% not expiring until FY20 and beyond.  Strategy to lengt

  28. Slide 28: Capital Management – Interest Rate Hedging

    Capital Management – Interest Rate Hedging  Accreting interest rate cap will cover $1bn by December 2017 allowing Cromwell to benefit when variable interest rates are <3.39%. For personal use only  Interest rate expense dropped to 3.96% in FY17 (FY16 5.27%).  Weighted average margin of 1.39% (FY1

  29. Slide 29: Outlook

    For personal use only SECTION 5 Outlook

  30. Slide 30: Outlook - Australian Growth Moderate, Risks Increasing

    Outlook - Australian Growth Moderate, Risks Increasing NAB Business Conditions For personal use only  Australian economic growth remains moderate. Finance, Business & Property Services Employment Index Sqm  Business and consumer confidence is subdued, household consumption below trend, inflation u

  31. Slide 31: Outlook - European Economic Recovery Continues

    Outlook - European Economic Recovery Continues EU GPD Growth Rate Picks-up  Eurozone growth continues to pick-up with unemployment at For personal use only the lowest rate since 2009, consumption, investment and Industrial Production Growth Rates all up.  Real Eurozone GDP growth has shown positiv

  32. Slide 32: Outlook – FY18 Capex and Distribution Coverage

    Outlook – FY18 Capex and Distribution Coverage  $96.8 million realised gain on sale of investment properties during last four years. For personal use only  Proceeds of sale applied for reinvestment.  Small part of surplus after capex and Tenant Incentives used to smooth distributions previously,

  33. Slide 33: Outlook - FY18 Earnings and Distributions Guidance

    Outlook - FY18 Earnings and Distributions Guidance Operating Earnings Guidance: 8.25 cps4 For personal use only Distributions Guidance: 8.34 cps4 For further information please contact: Cromwell Property Group FY17 Snapshot1 Paul Weightman CEO / Managing Director Market Cap: $1.7 bn2 paul.weightman@

  34. Slide 34: Appendices – Additional Information

    For personal use only APPENDICES Additional Information

  35. Slide 35: Appendices - Contents

    Appendices - Contents For personal use only  FY17 Operating and Statutory Profit – By Segment 34  FY17 Operating and Statutory Profit – Reconciliation 35  Segment Result – Operating Earnings Detail 36  Property Portfolio – Top 10 Assets 37  Property Portfolio – Top 20 Leases 38  Property Portf

  36. Slide 36: FY17 Operating and Statutory Profit - By Segment

    FY17 Operating and Statutory Profit - By Segment FY17 FY16 For personal use only Change ($M) ($M) Statutory profit 277.5 329.6 (15.8%) Statutory profit (cents per security) 15.8 18.9 (16.4%) Property Investment 124.7 135.4 (7.9%) Funds Management Internal 2.6 0.2 1200.0% Funds Management Retail 8.2

  37. Slide 37: FY17 Operating and Statutory Profit Reconciliation

    FY17 Operating and Statutory Profit Reconciliation FY Jun-17 FY Jun-16 (#039;000) (#039;000) For personal use only Profit from Operations 152,124 164,503 Operating EPS 8.65 CPS 9.41 CPS (Loss) / Gain on sale of investment property (898) 19,352 Gain / (loss) on disposal of other assets - (254) Other transa

  38. Slide 38: Segment Result - Operating Earnings Detail

    Segment Result - Operating Earnings Detail1 Funds Property / Funds For personal use only Property Management Property Year ending 30 June 2017 Funds Mgt Management FY17 Investment External Development Internal External Retail Wholesale Segment revenue Sales to external customers 214,273 5,455 11,727

  39. Slide 39: Property Portfolio – Top Assets

    Property Portfolio – Top 10 Assets For personal use only Asset State Class Book Value Cap Rate Occupancy WALE Major Tenants Qantas HQ NSW Office 455,000,000 5.25% 100.00% 14.2 years Qantas Tuggeranong Office Park Bldg 2 ACT Office 260,000,000 5.25% 99.02% 15.0 years Federal Government Kent Street, S

  40. Slide 40: Property Portfolio – Top Leases

    Property Portfolio – Top 20 Leases For personal use only Tenant Tenant Classification Expiry Date % of Portfolio Rental Income Qantas Airways Limited Listed Company/Subsidiary 20-Dec-32 14.1% Commonwealth of Australia Government Authority 31-Aug-32 7.9% Government Property NSW Government Authority 1

  41. Slide 41: Property Portfolio – Net Property Income

    Property Portfolio – Net Property Income FY17 ($) FYY16 ($) Variance ($) Variance (%) Comments For personal use only Health House 8,820,854 5,270,513 3,550,341 67.4% Makegood Income Bull Street, Newcastle 1,731,590 1,447,939 283,651 19.6% Market Rent Review Station Street, Penrith 2,685,201 2,247,03

  42. Slide 42: Property Portfolio – Net Property Income

    Property Portfolio – Net Property Income For personal use only FY17 ($) FY16 ($) Variance ($) Variance (%) Comments Village Cinema Geelong 1,270,515 1,238,254 32,261 2.6% Regent Cinema Centre 1,284,707 1,287,594 (2,887) (0.2%) Retail Total 2,555,222 2,525,848 29,374 1.2% TOTAL HELD PROPERTIES 174,85

  43. Slide 43: Property Portfolio – Movement In Book Value

    Property Portfolio – Movement In Book Value  Portfolio continuously improved through acquisitions since 2010. For personal use only  Frequent re-cycling of capital means disposing of assets before asset has large capex requirements.  In-sourced facilities management model also lowers lifecycle ca

  44. Slide 44: Property Portfolio - Debt Platform Facility Details

    Property Portfolio - Debt Platform Facility Details Maturity Fin Yr Years For personal use only Facility Drawn Commitment Covenants Date Expiry Remaining Bank 1 - 5 Year Facility 33,402,243 123,500,000 Mar-2021 2021 3.7 yrs Bank 2 - 5 Year Facility 100,000,000 100,000,000 Mar-2021 2021 3.7 yrs Bank

  45. Slide 45: For personal use only

    For personal use only CMW – FY17 Results 45

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